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CarMax (KMX) Gains But Lags Market: What You Should Know

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CarMax (KMX - Free Report) closed the most recent trading day at $146.48, moving +0.5% from the previous trading session. This move lagged the S&P 500's daily gain of 1.32%. At the same time, the Dow added 0.68%, and the tech-heavy Nasdaq lost 0.15%.

Heading into today, shares of the used car dealership chain had gained 6.45% over the past month, outpacing the Retail-Wholesale sector's loss of 0.46% and the S&P 500's gain of 3.61% in that time.

Investors will be hoping for strength from CarMax as it approaches its next earnings release. On that day, CarMax is projected to report earnings of $1.47 per share, which would represent year-over-year growth of 3.52%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $7.44 billion, up 43.44% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.31 per share and revenue of $30.17 billion, which would represent changes of +61.73% and +59.19%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for CarMax. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.7% lower. CarMax currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that CarMax has a Forward P/E ratio of 19.93 right now. This valuation marks a no noticeable deviation compared to its industry's average Forward P/E of 19.93.

Meanwhile, KMX's PEG ratio is currently 1.52. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. KMX's industry had an average PEG ratio of 1.54 as of yesterday's close.

The Automotive - Retail and Wholesale - Parts industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 69, which puts it in the top 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow KMX in the coming trading sessions, be sure to utilize Zacks.com.


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